Why do some people succeed spectacularly in the market while others fail?
The market is the same for one person as it is the next.
So why the big difference in performance between one individual and another?
It all boils down two things:
1) Knowing what works
2) Doing what works
While the stock market isn't a perfect science, the fact remains that if you concentrate on what works and stop doing what doesn't, you will most surely succeed in the market.
Knowledge Is Power
We've all heard the old adage, 'knowledge is power.'
It's a great saying because it's true.
And that saying couldn't be truer than when it comes to investing.
Take a look at your last big loser for example. After analyzing what went wrong, you soon discover some piece of information that, 'had you known beforehand, you never would have gotten into it in the first place.'
I'm not talking about things that are unknowable, like inside information or surprise announcements that can catch even the most professional of professionals off guard.
I'm talking about things that you could have known about or should have known about before you got in.
This is part of 'knowing what works'.
• Did you know that roughly half of a stock's price movement can be attributed to the group that it's in?
• Did you also know that oftentimes a mediocre stock in a top-performing group will outperform a 'great' stock in a poor performing group?
• And did you know that the top 50% of Zacks Ranked Industries outperforms the bottom 50% by a factor of more than 2 to 1?
• And did you also know that the top 10% of industries outperform the most?
More . . .
------------------------------------------------------------------------------------------------------
Alert: Buy These Ultimate Four Stocks ASAP
There's still time to get in early. These aren't just 4 promising stocks. They were handpicked from hundreds of strong companies by Zacks experts because they present the greatest upside for Q2:
Stock #1: Cybersecurity firm outsmarts bad guys, and beats Zacks estimates 24 Qs in a row.
Stock #2: Still-undervalued food company increased their dividend 7 times in the last 5 years.
Stock #3: Looking for the next Amazon to dominate another continent? Start here.
Stock #4: Jump on a tech stock with sales have already multiplied more than 30X since 2017.
Deadline to download our just-released Ultimate Four Special Report is Sunday, April 9.
See Our “Ultimate” Stocks Now >>
------------------------------------------------------------------------------------------------------
Was your last loser in one of the top industries or in one of the bottom industries?
If it was in one of the bottom industries, you should have known to not take a chance on something with a reduced probability of success.
That is the 'doing what works' part. (And not doing what doesn't work.)
That's not to say that stocks in crummy industries won't go up -- they do. And that's not to say that stocks in good industries won't go down -- because they do too.
But more stocks go up in the top industries, and more stocks go down in the bottom industries.
And that's part of the science of making money in stocks.
If you follow a set of proven profitable rules, you'll have a higher probability of succeeding.
Know What Works
• Did you know that stocks with 'just' double-digit growth rates typically outperform stocks with triple-digit growth rates?
• Did you also know that stocks with crazy high growth rates test nearly as poorly as those with the lowest growth rates?
Did your last loser have a spectacular growth rate?
If so, and it got crushed, would you have picked it if you knew that stocks with the highest growth rates have spotty track records?
Once again, this is the 'know what works' part.
It seems logical to think that the companies with the highest growth rates would do the best. But it doesn't always turn out to be the case.
One explanation for this is that sky high growth rates are unsustainable. And the moment a more normal (albeit still good) growth rate emerges, the stock gets a dose of reality as well.
For example, a company earning 1 cent a share that is now expected to earn 6 cents, has a 500% growth rate. But, if it receives a downward estimate revision to 5 cents, that’s a significant drop. Even though it still has a 400% growth rate, the estimates were just reduced by -16.7% and the price is likely to follow.
If you’ve ever wondered how a stock with a triple-digit growth rate could possibly go down -- that’s how.
Instead, I have found that comparing a stock to the median growth rate for its industry is the best way to find solid outperformers with a lesser chance to disappoint. And focusing on companies with growth rates above the median, but less than 50%, has produced some of the best results.
Did You Know?...
• Did you know that stocks receiving broker rating upgrades have historically outperformed those with no rating change by more than 1.5 times? And did you know they outperformed stocks receiving downgrades by more than 10 x as much? The next time one of your stocks is upgraded or downgraded, be sure to remember these statistics so you know how the odds stack up and whether they're for you or against you.
• Did you know that stocks with a Price to Sales ratio of less than 1 have produced significantly superior results over companies with a Price to Sales ratio greater than 1? And did you know that those with a Price to Sales ratio of greater than 4 have been typically shown to lose money? That doesn't mean that all stocks with a P/S ratio of less than one will go up, and those over four will go down, but you can greatly increase your odds of success by following these valuations.
• Did you know that the Zacks Rank is one of the best rating systems out there? And did you know that stocks with a Zacks Rank #1 Strong Buy have beaten the market in 29 of the last 35 years, with an average annual return of more than 24% per year? That’s more than 2 x the returns of the S&P with an 82% annual win ratio. That includes 4 bear markets and 4 recessions. And consistently beating the market year after year can add up to a lot more than just two times the returns.
Do you know how well your stock picking strategies have performed?
Whether good or bad -- do you know why?
Do you know if your favorite item to pick stocks with is helping you or hurting you?
If not, you should.
Stock Picking Secrets of the Pros
Picking better stocks and making better decisions is a lot easier when there’s a proven, profitable way to do it.
And one of the best ways to do that is to see what stocks the pros, who use these methods, are picking.
Whether you’re a growth investor, or a value investor, prefer fast-paced momentum stocks, or mature dividend-paying income stocks, there are certain rules the experts follow to maximize their gains.
This applies to large-caps and small-caps, biotech and high-tech, ETFs, stocks under $10, stocks about to surprise, even options, and everything in between.
Regardless of which one fits your personal style of trade, just be sure you’re following proven profitable methods and strategies that work, from experts who have demonstrated their ability to beat the market.
The best part about these strategies and stock picks is that all of the hard work is done for you. There’s no guesswork involved. Just follow the experts and start confidently getting into better stocks on your very next trade.
What The Pros Are Picking In Q2
Using the market-doubling Zacks Rank as a foundation, our experts have hand-picked 4 stocks poised to outperform this quarter. And today, we’re revealing these high-potential recommendations to our readers:
Download our just-released Ultimate Four Special Report.
Each has strong fundamentals and strong growth potential. They’re ideally suited to soar in current trading conditions.
And the earlier you get aboard the greater your profit potential.
Stock #1: A U.S. cybersecurity leader is engaging in a stunningly successful battle against bad actors. Profits build as the battle rages. Its cutting edge solutions have propelled the company to exceed Zacks Consensus EPS estimates 24 quarters in a row.
Stock #2: Inflated commodity prices are generating immense profits from this small yet still-undervalued food company. Their product is always in demand, with a dividend increasing 7 times in the last 5 years.
Stock #3: Looking for the next Amazon to dominate another continent? It’s already a large-cap aiming to be a colossal-cap in traditional e-commerce, real estate platforms, and ads.
Stock #4: As the world digitizes, it’s time to jump on a tech stock in gaming, e-commerce, and financial services. After subsiding from a 4-digit boom, this company is now gaining traction for its next monster move. Sales have already multiplied more than 30X since 2017.
Plus, in addition to our Ultimate Four stocks for $1, you'll get full 30-day access to ALL Zacks private buys & sells with that same dollar. These services recently closed gains of +221.2% in Cross Country Healthcare, +348.7% in InMode, and even +1,007.1% in Tesla.¹
I should mention that the Ultimate Four report and 30-day access to all our picks come to you for a total of only $1. Not a cent of additional obligation. Opportunity ends midnight Sunday, April 9.
See our Ultimate Four - plus all other private Zacks picks now >>
Thanks and good trading,
Kevin
Kevin Matras serves as Executive Vice President of Zacks.com and is responsible for all of its leading products for individual investors. He invites you to download Zacks' just-released Ultimate Four Special Report before the April 9 deadline.
¹ The results listed above are not (or may not be) representative of the performance of all selections made by Zacks Investment Research's newsletter editors and may represent the partial close of a position.
Image: Bigstock
The Science Of Making Money In Stocks
Why do some people succeed spectacularly in the market while others fail?
The market is the same for one person as it is the next.
So why the big difference in performance between one individual and another?
It all boils down two things:
1) Knowing what works
2) Doing what works
While the stock market isn't a perfect science, the fact remains that if you concentrate on what works and stop doing what doesn't, you will most surely succeed in the market.
Knowledge Is Power
We've all heard the old adage, 'knowledge is power.'
It's a great saying because it's true.
And that saying couldn't be truer than when it comes to investing.
Take a look at your last big loser for example. After analyzing what went wrong, you soon discover some piece of information that, 'had you known beforehand, you never would have gotten into it in the first place.'
I'm not talking about things that are unknowable, like inside information or surprise announcements that can catch even the most professional of professionals off guard.
I'm talking about things that you could have known about or should have known about before you got in.
This is part of 'knowing what works'.
• Did you know that roughly half of a stock's price movement can be attributed to the group that it's in?
• Did you also know that oftentimes a mediocre stock in a top-performing group will outperform a 'great' stock in a poor performing group?
• And did you know that the top 50% of Zacks Ranked Industries outperforms the bottom 50% by a factor of more than 2 to 1?
• And did you also know that the top 10% of industries outperform the most?
More . . .
------------------------------------------------------------------------------------------------------
Alert: Buy These Ultimate Four Stocks ASAP
There's still time to get in early. These aren't just 4 promising stocks. They were handpicked from hundreds of strong companies by Zacks experts because they present the greatest upside for Q2:
Stock #1: Cybersecurity firm outsmarts bad guys, and beats Zacks estimates 24 Qs in a row.
Stock #2: Still-undervalued food company increased their dividend 7 times in the last 5 years.
Stock #3: Looking for the next Amazon to dominate another continent? Start here.
Stock #4: Jump on a tech stock with sales have already multiplied more than 30X since 2017.
Deadline to download our just-released Ultimate Four Special Report is Sunday, April 9.
See Our “Ultimate” Stocks Now >>
------------------------------------------------------------------------------------------------------
Was your last loser in one of the top industries or in one of the bottom industries?
If it was in one of the bottom industries, you should have known to not take a chance on something with a reduced probability of success.
That is the 'doing what works' part. (And not doing what doesn't work.)
That's not to say that stocks in crummy industries won't go up -- they do. And that's not to say that stocks in good industries won't go down -- because they do too.
But more stocks go up in the top industries, and more stocks go down in the bottom industries.
And that's part of the science of making money in stocks.
If you follow a set of proven profitable rules, you'll have a higher probability of succeeding.
Know What Works
• Did you know that stocks with 'just' double-digit growth rates typically outperform stocks with triple-digit growth rates?
• Did you also know that stocks with crazy high growth rates test nearly as poorly as those with the lowest growth rates?
Did your last loser have a spectacular growth rate?
If so, and it got crushed, would you have picked it if you knew that stocks with the highest growth rates have spotty track records?
Once again, this is the 'know what works' part.
It seems logical to think that the companies with the highest growth rates would do the best. But it doesn't always turn out to be the case.
One explanation for this is that sky high growth rates are unsustainable. And the moment a more normal (albeit still good) growth rate emerges, the stock gets a dose of reality as well.
For example, a company earning 1 cent a share that is now expected to earn 6 cents, has a 500% growth rate. But, if it receives a downward estimate revision to 5 cents, that’s a significant drop. Even though it still has a 400% growth rate, the estimates were just reduced by -16.7% and the price is likely to follow.
If you’ve ever wondered how a stock with a triple-digit growth rate could possibly go down -- that’s how.
Instead, I have found that comparing a stock to the median growth rate for its industry is the best way to find solid outperformers with a lesser chance to disappoint. And focusing on companies with growth rates above the median, but less than 50%, has produced some of the best results.
Did You Know?...
• Did you know that stocks receiving broker rating upgrades have historically outperformed those with no rating change by more than 1.5 times? And did you know they outperformed stocks receiving downgrades by more than 10 x as much? The next time one of your stocks is upgraded or downgraded, be sure to remember these statistics so you know how the odds stack up and whether they're for you or against you.
• Did you know that stocks with a Price to Sales ratio of less than 1 have produced significantly superior results over companies with a Price to Sales ratio greater than 1? And did you know that those with a Price to Sales ratio of greater than 4 have been typically shown to lose money? That doesn't mean that all stocks with a P/S ratio of less than one will go up, and those over four will go down, but you can greatly increase your odds of success by following these valuations.
• Did you know that the Zacks Rank is one of the best rating systems out there? And did you know that stocks with a Zacks Rank #1 Strong Buy have beaten the market in 29 of the last 35 years, with an average annual return of more than 24% per year? That’s more than 2 x the returns of the S&P with an 82% annual win ratio. That includes 4 bear markets and 4 recessions. And consistently beating the market year after year can add up to a lot more than just two times the returns.
Do you know how well your stock picking strategies have performed?
Whether good or bad -- do you know why?
Do you know if your favorite item to pick stocks with is helping you or hurting you?
If not, you should.
Stock Picking Secrets of the Pros
Picking better stocks and making better decisions is a lot easier when there’s a proven, profitable way to do it.
And one of the best ways to do that is to see what stocks the pros, who use these methods, are picking.
Whether you’re a growth investor, or a value investor, prefer fast-paced momentum stocks, or mature dividend-paying income stocks, there are certain rules the experts follow to maximize their gains.
This applies to large-caps and small-caps, biotech and high-tech, ETFs, stocks under $10, stocks about to surprise, even options, and everything in between.
Regardless of which one fits your personal style of trade, just be sure you’re following proven profitable methods and strategies that work, from experts who have demonstrated their ability to beat the market.
The best part about these strategies and stock picks is that all of the hard work is done for you. There’s no guesswork involved. Just follow the experts and start confidently getting into better stocks on your very next trade.
What The Pros Are Picking In Q2
Using the market-doubling Zacks Rank as a foundation, our experts have hand-picked 4 stocks poised to outperform this quarter. And today, we’re revealing these high-potential recommendations to our readers:
Download our just-released Ultimate Four Special Report.
Each has strong fundamentals and strong growth potential. They’re ideally suited to soar in current trading conditions.
And the earlier you get aboard the greater your profit potential.
Stock #1: A U.S. cybersecurity leader is engaging in a stunningly successful battle against bad actors. Profits build as the battle rages. Its cutting edge solutions have propelled the company to exceed Zacks Consensus EPS estimates 24 quarters in a row.
Stock #2: Inflated commodity prices are generating immense profits from this small yet still-undervalued food company. Their product is always in demand, with a dividend increasing 7 times in the last 5 years.
Stock #3: Looking for the next Amazon to dominate another continent? It’s already a large-cap aiming to be a colossal-cap in traditional e-commerce, real estate platforms, and ads.
Stock #4: As the world digitizes, it’s time to jump on a tech stock in gaming, e-commerce, and financial services. After subsiding from a 4-digit boom, this company is now gaining traction for its next monster move. Sales have already multiplied more than 30X since 2017.
Plus, in addition to our Ultimate Four stocks for $1, you'll get full 30-day access to ALL Zacks private buys & sells with that same dollar. These services recently closed gains of +221.2% in Cross Country Healthcare, +348.7% in InMode, and even +1,007.1% in Tesla.¹
I should mention that the Ultimate Four report and 30-day access to all our picks come to you for a total of only $1. Not a cent of additional obligation. Opportunity ends midnight Sunday, April 9.
See our Ultimate Four - plus all other private Zacks picks now >>
Thanks and good trading,
Kevin
Kevin Matras serves as Executive Vice President of Zacks.com and is responsible for all of its leading products for individual investors. He invites you to download Zacks' just-released Ultimate Four Special Report before the April 9 deadline.
¹ The results listed above are not (or may not be) representative of the performance of all selections made by Zacks Investment Research's newsletter editors and may represent the partial close of a position.